Archive for the ‘Public Employees’ Category

The results of Tuesday’s elections were ominous for public employee unions. The election with the most publicity was the failed recall of Wisconsin Gov. Scott Walker. However, two elections in California may be of even more significance for unions.

The cities of San Diego and San Jose voted to cut pension benefits for their public employees. The margins indicate significant voter anger with San Diego passing the measure by two thirds and San Jose by approximately 70%. Adding significance to these results is that they occurred in California, a liberal state that traditionally votes Democratic.

The problems that San Diego, San Jose and many other municipalities and states face are bloated and unsustainable benefits going to public employees. These benefits were substantially increased during the bubble years by politicians who are no longer in office. Now the chickens have come home to roost and the governments have been forced to cut services and layoff workers to pay for the benefits.

The problems cities and municipalities face caused by the excessive benefits for their employees are examples as to why public employees should not be allowed to organize. Not only do they negotiate with people who do not have to pay the bills, but often these same politicians offer the employees benefits in exchange for union votes. This perverse reality has resulted in public employees being paid far in excess of private employee counterparts. For example, police officers and firefighters in San Jose have the ability to retire after only 30 years with pensions worth 90% of their salaries.

The high cost of public employees has created a dilemma for Democratic politicians who run many of America’s large municipalities. As examples, San Jose’s mayor is a Democrat and even Democrat Mayor Rahm Emanuel of Chicago is attempting to cut public employee pension costs. This reality places Democrats at odds with one of their most important supporters, public employee unions. It will make a special interest group less enthused about voting.

In Wisconsin yesterday Gov. Scott Walker survived an attempted recall vote by a 53% to a 46% margin. The election centered on the power and demands of government employee unions. Last year Gov. Walker limited collective-bargaining rights for Wisconsin public employees and also made these employees pay for more of their pension and healthcare benefits costs. These actions directly led to the recall attempt.

The results in Wisconsin are significant on various fronts. First, voter turnout was heavy making the outcome a legitimate test of the electorates’ desires. In addition, Wisconsin is a middle-of-the-road state has traditionally had a liberal leaning. Finally, Barack Obama beat John McCain by 14% margin just three years ago, an indication that the race will be tighter in this fall’s presidential election.

The Left has attempted to portray the election in Wisconsin as a mean-spirited conservative attempting to trample on working men in women rights. This false narrative ignores the reality that benefit costs for state workers are at crisis levels. According to the Pew Research Center state governments owe in excess of $1 trillion to public health care programs and pensions. The Left’s refusal to acknowledge the crisis is bizarre and self-serving.

In a victory speech after election Walker said: “Tonight we tell Wisconsin, we tell our country, and we tell people all across the world that voters really do want leaders who stand up and make the tough decisions. But now it is time to move on and move forward in Wisconsin.” If only it was this simple.

During periods of deleveraging as we now face, people are hurt economically. As the belt-tightening continues, special-interest groups, whether labor unions or large corporations, lobby to have the other guy pay the piper. Each will continue to claim noble reasons for being spared the cuts. At the end of the day is merely self-interest.

Newsradio 620 WTMJ out of Wisconsin reported on the ongoing despicable behavior by public employee unions in the state. Last Friday, Wisconsin’s Governor Walker visited a local school in order to read students. He was not only met by protesters, but also the Vandals. It seems some of the disgruntled unionists superglued locks on school doors in an effort to disrupt the visit.

The local school’s president said the disruptions: “People ought to start acting like adults. You’ve got little kids who have no clue what you’re even talking about, and you make something political when it isn’t, that’s just flat-out wrong.”

The aggressiveness and greed of unions typically blocks reason.

Throughout history manufacturing unions used disruptive and sometimes violent acts to promote goals of increased wages and benefits. Society often turned a blind eye towards these tactics in the mistaken belief that the unions were representing David against Goliath. While in the short run the unions’ tactics helped them obtain increased wages and benefits for members, they also led to the destruction of heavy manufacturing in the United States and the loss of millions of union jobs.

After unions helped destroy major manufacturing in the United States, they turned their focus towards other sources of dues paying members. Without member dues, union bosses could not continue getting paid. Their focus was on the public employees including teachers.

Union strategies for increasing wages and benefits for their public employee members changed little from their earlier manufacturing roots. The threat of strikes and other intimidation forced states and municipalities to acquiesce in demands that were unsustainable in the long run. With local governments now in dire financial conditions, politicians like Governor Walker are forced to say “no more”. This has led to even more aggressive and sometimes desperate union tactics in their attempt to avoid the inevitable.

In the battle between unions and major manufacturers in the United States, management was not without fault. They acquiesced to economically unsound union demands because of shortsightedness. In addition, they did not recognize that manufacturing was moving towards worldwide competition. Those manufacturers that have not since been bailed out, no longer produce goods United States. While a sad resolution, as a way free markets operate.

Public-sector businesses, such as schools, cannot close down like the manufacturers who preceded them. Politicians and bureaucrats, like their short sighted counterparts in heavy manufacturing decades previously, too often acquiesced to unsustainable union demands. Now states and municipalities are running deficits and are forced address the challenges. The required actions will be more painful and difficult than had they been reasonably addressed in real-time.

Certainly the challenges that face America’s educational systems are complex and involve much more than teachers. However, the greed and inappropriate behavior exhibited by some teachers unions do not set appropriate role models for the educational environment.

On June 30th British civil servants, including teachers and others, went on strike over plans to reform their pension plans and other budgetary cuts announced by the government. About 750,000 public-sector workers took part in the one-day walkout causing school closures and disruptions in air travel and other governmental services. The stoppage was but a warning shot fired at the government with the Public and Commercial Services Union promising even larger strikes in autumn.

It is not surprising that public workers in Britain, Greece, and yes Wisconsin, are ratcheting up the protests. When the economic meltdown hit, many in the private work force faced cut backs and layoffs. Even before that private workers lost their unsustainable Defined Benefit pension plans. Governmental workers were spared the pain since the funds came from the taxpayers and the government was all too willing to keep up the unsustainable compensation packages. In fact, after the meltdown hit governments worldwide spent even more in an effort to stimulate the economies. With the dismal failure of those efforts governments are saddled with massive debt that must be paid down. That means cut backs for governmental employees.

Governments have no choice but to cut the costs of supplying services, as the private sector has been forced to do. In the private sector while the actions are painful, the choice is clear. Cut costs to bring them in line with lower revenue numbers or go out of business. Many employees in the private sector understand this reality. However, in the public sector, employees often delude themselves into believing that governments cannot become insolvent. They also believe that there is an endless stream of revenue available to governments by raising taxes. This fairy tale is often furthered by politicians that ferment class warfare and cook the books.

Greece is the first canary in the mine. The country is insolvent and will need to declare bankruptcy no matter what short-term interventions the European Union offers. The resulting pain for Greece’s governmental workers will high, as it will for those irresponsible banks that made loans to that dysfunctional country.

Government workers in all countries with excessive debt, including the United States and England, will have to do more with less. It is the price we all are paying for the excesses of the Baby Boomer generation.

California is one of the most liberal sates in the Country. It was therefore surpassing when a recent poll found that even these folks want to tame the runaway cost of its public employees.

A bipartisan poll for The Times of Los Angeles and the USC Dornsife College of Letters, Arts and Sciences found the following results from those polled:

70% of respondents support capping pensions for current and future public employees.

68% approved of raising the amount government workers contribute to their retirement.

52% favor increasing the age public employees may collect pensions.

This Left-coast state has allowed public safety officers the ability to retire at 50 years old with pensions equally 60% of their salary after 20 years of service. Other employees can retire at 55 with a hefty pension.

Why have Californians changed their views on wages and benefits for state porkers? No, it’s not because they see the wisdom of a free market when it comes to paying workers. It’s just a matter of self-preservation. When Californians could pay off the public employees with other people’s money or barrowed funds they were strong backers of these unions. Now that the average Californian is hurting they no longer feel so altruistic. It just goes to show that Adam Smith was right, even when it comes to California.

Throughout the Midwest public employees are protesting like it is the end of the world. Who can blame them. They had a great run of it, taking ever increasing taxpayer money and it is painful giving back. But like other bubbles, this one too was destined to end.

Most that work in the private sector understand the sometimes cruel laws of economics. When times are good, wages and benefits go up. When recessions hit, salaries and benefits suffer and unfortunately some jobs go away. But those working in the public sector have been trained by a different set of realities. In good and bad times they expect wages and benies to keep going up. Why not; unlike private businesses, governments cannot shut down. Unlike private businesses, if more funds are needed to pay for employees, raise the taxes and let the next elected officials worry about the problems. However, like all unsustainable economic models, even governments can fail, as we are starting to see in Europe.

Now many American states are also at the end of their financial road. While their financial models were unsustainable even years ago, the economic meltdown hastened the end of the state-run shell games. States gave pensions to workers that few in the private sector now receive. They also supplied nearly free medical benefits, whereas those that work in the private sector pay about a quarter of their medical costs. Making the financial models more perverse, the states assumed unrealistic returns on pension funds and incorrect future medical costs that insured when a recession hit, they would quickly become insolvent. They are now there.

State employees in Wisconsin are at ground zero of the battle between taxpayers and their employees. Given the compensation discrepancies that exist between those that work in the private and public sectors, the protesters’ rallying cry has changed to their collective bargaining “right”. This is a deflection; as it is nearly always about the money. However, the issue of whether or not public employees have the “right” to collective bargaining is one that needs public discourse. Here are some reasons why public employees should not have this option:

Public employee unions are major contributors to political campaigns, specifically the Democrat Party. The Democrats are beholding to the unions, who are then rewarded by the Party by its giving into their wage and benefit demands. Their conflict of interest and its symbiotic relationship leads to corruption and unfair bargaining on behalf of the public employees’ bosses, taxpayer. There is no better proof then the extent to which Democrats will go to protect their union allies. In Wisconsin and Indiana, Democrat legislators have eloped from their states to stop votes (legislation) that unions are against. The fact that voters a few months earlier demanded these changes is of no concern to the unions.

Taxpayers pay government employees and unions then collect dues from these employees that then go to fund union executives and a political party. The first item is capitalism; the second is corruption.

The public employees’ bosses, taxpayers, are hurting badly from the recession. The fact that the Democrat politicians that also work for the taxpayers have sided with a special interest group, state employees, against the interest of the taxpayers indicates corruption.

Only about 7% of private sector employees are represented by unions, down from a high of about 33%. During this same period union representation in the public sector increased from 10% to 36%. The reason for this huge drop in the private sector is simple: unionized companies are not competitive due to crazy work rules unions obtained through collective bargaining. Many of these companies have gone out of business. Collective bargaining has led to the same affliction in the public sector resulting in government services being a joke to many taxpayers. It’s time to put a stop to this insanity in the public sector.

Perhaps the best argument against allowing public employees the “right” to collective bargaining comes from a basic tenant of Progressive philosophy to which labor unions and Democrats are followers. Progressives profess that government is the answer to all societal needs including poverty, counseling, medical care and much more. Why then would those that work for this benevolent government need and protection from it, including collective bargaining? If unions need protection from the government, who protects the taxpayers from these same scoundrels?